What Richard Florida, Klaus Schwab and Others Coined as The Great Reset, and What It Means For Your Money
At least a couple times a year for the last 6 years, and numerous times in front of the 2020 Presidential election and recently, Oak Harvest prospects or clients have asked me about the coming “Great Reset”? Admittingly, the first few times I was asked this question, I had to Google the term as I had no idea what I was being asked about. In each instance, I was asked the question first out of fear of an impending stock market collapse or a government takeover of our personal and financial freedoms. I’m here to address to date the history of what fearing these messages, stories or rumors from youtubers, financial soothsayers, politicians, or downright con artists has done to your money.
First the history of the term “great reset” predates many view that the term was coined by the WEF, World Economic Forum post covid in 2020-2021. In fact, Richard Florida of the University of Toronto most recently coined the term in 2010, in his post -GFC book, The Great Reset: How New Ways of Living and Working Drive Post-Crash Prosperity.
In January 2013, into President Obama’s 2nd term as President, the term was once again brought forward into the lexicon of American media to describe impending change that his governing might bring on Americans.
In June 2020 and early 2021, the World Economic Forum, led by their self-promoting Professor leader, Klaus Schwab took up the slogan “The Great Reset” initiative with the outward goal of “reimagining capitalization”. In Klaus world, this was an effort to reduce global inequality and advance environmental initiatives in the wake of the devastation of the coronavirus. Their words are not mine. In my world, the world of public market investing, it was a way of governments and others with motivations outside of shareholder returns to thrust themselves into the spotlight and create friction in the capital markets.
There have been other numerous times over the last 14 years that this term has come to the forefront in the media, presented almost always as a scare tactic to investors and their money.
And had you listened to those pundits on YouTube or mainstream media, or acted emotionally to these stories from the purveyors of this idea and its dooming America and its citizens, what would have you missed out on in the public equity markets? Well, here is a chart of the S&P500 with the time of those major stories noted and highlighted.
If you sold all your stocks when the theory first appeared after the GFC, you missed out on a gain of over 450% or 12.5% per year compounded for 14 years. Ok you held off when the book was released because no one reads economic theory books from anyone let alone a Canadian academic. You waited until President Obama was reelected and sold then on inauguration in 2013? You missed on over 300% gain in the S&P 500 and over 12.75% compounded per year for the last 11 years.
Ok, maybe you had learned your lesson after the first Obama presidency that all Democratic Presidents weren’t bad for stocks, even if you didn’t like his policies and you didn’t sell in January 2013 on his Great Reset. Rather you waited until some unknown, German economics professor, whose own country didn’t like his theories, so he left, set out another Great Reset outline post the Covid virus global economic shutdown? If you sold in June 2020, you missed 105% or 17%+ compounded for the last 4 years and if you waited until all the global elites gathered in Davos in early 2021 to sell, well then you have only missed over 55% or 13%+ compounded the past 3 years.
Investors, whether the Great Reset is real, hype, a Fad, or conspiracy theory, I don’t know but I do know, that your money, and its investment return cares about how much cash you put into an idea and what cash is returned over time to you. Missing out even on market indexed returns because of an emotionally charged yet unproven theory like the Great Reset does not make good investment sense to our team.
To get our teams thoughts on more timely topics like the Federal Reserve or the election, Troy, Charles and I did a 90-minute livestream last week covering our teams thoughts on various topics. Here’s the link to that broadcast, we hope you subscribe to it and my stock talk You-Tube channels. In it we covered a lot of ground including yesterday’s Federal Reserve meeting and actions, the upcoming Presidential election, seasonals in the stock markets, government economic data, inflation and economic growth and where we stand versus our teams 2024 overall market outlook and the second half of the year. So far, it pretty much trading on plan for the year and we have not changed our optimistic outlook for year end 2024 of around 5800 on the S&P500 since we first alluded to it in 4th quarter 2023. Our early 1q25 target remains 6000 but given the current backdrop and what I am seeing, I lean that the 6000 figure is too low by up to 200 S&P500 under a soft-landing, goldilocks, year end FOMO move up post-election extending into inauguration time.
So, wrapping it up, what does the Great Reset mean for you and your money? It means that the next time someone on YouTube or TV starts talking about the “Great Reset”, it’s best to either 1- hit the reset button and turn off the TV or change the channel, 2-try to remain unemotional about the content being presented or 3- just listen and be entertained because for the last 14 years, the Great Reset, and whatever that means has been irrelevant to you and your money unless it scared you out of the US stock markets and its impressive returns based on economic growth and capitalism however that is morphing from generation to generation.
If you are uncomfortable with wider range of possible equity outcomes, the Oak Harvest team has launched a new strategy that retains the ability to go long stocks, short stocks, as well as buy partial hedges and shock absorber for a stock portfolio. You can Google “OHFGX Oak Harvest” or find information on this new strategy of ours can be found at OakHarvestFunds.com.
From the whole team here, thank you and have a great weekend.
Chris Perras
CFA®, CLU®, ChFC®
Chief Investment Officer, Financial Advisor
Chris is a seasoned investment professional with over 25 years of experience working with some of the most successful money management firms in the world. Chris has made it a point in his career to adapt as the market landscape changes, seeking to utilize the appropriate investment strategy for a given market environment. His transition from managing billions of dollars at the institutional level to helping individuals and families retire is guided by a desire to see first-hand the impact he is making in the lives of clients at Oak Harvest.